Germany Archive

October 2017

Businesses could find VAT accounting easier after the European Court of Justice (ECJ) ruled that hire purchase-like contracts, which include an option to buy, should be treated as a supply of goods, rather than services, if exercising this option is the lessee’s obvious choice.

Ministers of the EU Economic and Financial Affairs Council (ECOFIN) have agreed on a new system for resolving double taxation disputes between member states that could see litigation and compliance costs fall considerably for businesses operating in the EU.

The EU hopes that its plan to reform the VAT system, which includes changes to the digital single market, will make it more resilient to the massive level of fraud currently prevalent within its borders.

International Tax Review and TP Week are proud to present World Tax 2018 and World Transfer Pricing 2018, the comprehensive guides to the leading tax advisory practices, including law and accountancy firms, around the world. Joe Stanley-Smith, World Tax editor, introduces the guides.

Angela Merkel has won a fourth term as German Chancellor, putting tax reform in Germany and the EU on the cards. But the election results suggest that it won’t be easy for Merkel to get her way on all tax matters.

Ten EU member states agreed that large digital multinational such as Google, Amazon, Apple and Facebook will have to pay their ‘fair share of tax’. However, a lack of consensus around the core proposal for an equalisation tax remains.

Multinational technology giants like Google, Amazon, Apple, Microsoft and Facebook could face higher tax bills under EU plans to introduce virtual permanent establishment rules. However, such rules could be difficult for governments to administer.

According to German media, members of the Swiss intelligence agency are being investigated for spying on the German tax authorities. One whistle-blower is not in the least bit surprised, International Tax Review has learned.

The finance ministers of some of the world’s most notorious tax havens believe their countries’ policies are fair, robust and meet international standards. Anjana Haines cuts through the PR to see what role these jurisdictions play in an era of BEPS measures and increasing transparency.

The tax status and characterisation of passive holding companies has gained renewed interest with Article 7 of the OECD’s Multilateral Instrument (MLI) containing some reference to these entities. Mauro Manca of Giovannelli e Associati looks at how these structures can still work if there are sound organisational reasons in the MNE structure.

The tax payments of Airbnb, Google, Facebook and Amazon have prompted the French finance minister to push, together with Germany, for the EU harmonisation of corporate tax rates. But will this solve the ‘paying a fair share’ argument, or does the problem lie with domestic PE rules?

July 2017

The ECJ will soon rule on a case involving global pharmaceutical company Boehringer Ingelheim that will set a VAT precedent for the pharmaceutical sector. Jan Sanders, indirect tax manager at RELX, discusses the impact of a ruling on this long-debated matter concerning the VAT treatment of supplies outside a distribution chain.

Under its tax regime, Germany grants a tax exemption only for domestic funds but not for foreign funds. The Fiscal Court Münster (20/04/2017,10 K 3059/14 K) ruled that this is in line with the EU freedoms because the situation of German funds is not comparable to that of foreign funds.

The European Commission has made some surprising decisions in recent years about how tax rulings between multinationals and EU member states constitute state aid. In the second of this two-part series of articles, Carina Lange, senior consultant at CEG Global in the Netherlands, discusses how multinationals can maintain legal certainty and assess the risks associated with tax rulings.

Tax work is being transformed by technology, and the role of the tax director is changing with it. Joe Stanley-Smith looks at the new tools on offer to businesses, the skills needed to use them properly, and why companies need to jump on the bandwagon sooner rather than later.

Germany's Federal Constitutional Court has ruled that the German change-in-ownership rules relating to loss carryforwards partially infringe the constitution, and must be amended with retroactive effect.

German companies could be hit with an unexpected tax bill if the European Court of Justice (ECJ) rules that a commonly used clause in the country’s Real Estate Transfer Tax (RETT) Act constitutes state aid.

The German Federal Fiscal Court, citing doubts over the country’s real estate transfer tax (RETT), has referred a list of questions to the European Court of Justice (ECJ) to determine whether the tax is compatible with state aid provisions.

Leaked documents reportedly reveal the Commission is seeking to tighten its regulation of what activists term the ‘supply side’ of tax avoidance – the banks, law and accountancy firms that devise aggressive schemes.

Two European Parliament committees that adopted a draft report on public country-by-country reporting (CbCR) have received heavy criticism over a proposed ‘loophole’ that will allow MNEs to not publically disclose “commercially-sensitive” information.

Gunther Wagner has returned to the Hengeler Mueller’s tax practice as a counsel. He previously worked as an associate for the firm from 2009 to 2015. As an associate, Wagner advised German utility RWE on the sale of its oil unit, Dea. He also advised on the sale of 360T to Deutche Börse AG.

May 2017

The European Union (EU) Council has adopted rules to prevent multinationals using hybrid mismatch arrangements to avoid taxation, but the measures risk conflicts with national laws and could give rise to disputes.

Governments have six months to prepare before peer reviews begin on how they meet the minimum standards of the BEPS project, including Action 6 on treaty shopping. But tax authorities could face some difficulties in meeting their targets.

There is one topic that is seemingly silent by tax administrations, non-governmental organisations (NGOs), parliamentarians and international tax bodies: double taxation. Keith Brockman reviews the state of play and what can be done to help multinationals.

Peter Green, head of the Forum on Tax Administration (FTA) Secretariat at the OECD shares his views with the Inland Revenue Authority of Singapore (IRAS) and International Tax Review on how technology is changing the status quo for many industries and tax administrations with the constant emergence of new technologies and rising taxpayer expectations.

Tax departments are feeling the heat. A tsunami of changes is causing them to rethink their purpose and review how they operate. Mark Body, director, tax transformation (financial services) at KPMG in the UK, considers how corporate tax leaders are adapting to the changes, and what the future is likely to hold for them and their teams.

The OECD and the Financial Action Task Force (FATF) are considering how to improve implementation of the international standards on transparency, including on the availability of beneficial ownership information and its international exchange. Julia de Jong, Alexander Meyer, and Jeffrey Owens of the Global Tax Policy Centre at the Institute of Austrian and International Tax Law within the Vienna University of Economics and Business explore how blockchain technology could be used to achieve this goal.

Understanding competition economics can help multinationals and national authorities restore and maintain the legal certainty of tax rulings. In the first of a two-part series of articles, Carina Lange, senior consultant at CEG Global in the Netherlands, explains the approach the Commission is taking to assess whether tax rulings or systems distort competition and how it fits into the general economic assessment of state aid cases.

Businesses operating in the EU could see their litigation and compliance costs fall considerably after the EU Economic and Financial Affairs Council (ECOFIN) agreed on a new system for resolving double taxation disputes within the 27-member bloc.

The German Federal Fiscal Court has published a decision regarding the VAT treatment of supplies via consignment stocks (VR 1/16). Ronny Langer, partner at Küffner Maunz Langer Zugmaier, explains what this case could mean for other cross-border transactions.

The submission period for World Tax and World Transfer Pricing 2018 has ended. Firms interested in making submissions should contact their country's researcher immediately if they have missed the deadline.

April 2017

Country-by-country reporting (CbCR) deadlines are approaching and MNEs are carefully preparing the information and diligence behind the numbers. CbCR brings us to the next phase and Keith Brockman asks how reputational risk will be questioned by the public (if disclosed) and defended or ignored by MNEs and tax administrations.

On March 30, International Tax Review hosted its Indirect Tax Forum at the Hyatt Regency Hotel in Düsseldorf, Germany, in association with WTS. The day was a great success, with open dialogue from in-house tax professionals, tax advisers and campaigners. Here, conference host Joe Stanley-Smith presents some of the highlights from the day.

Tax planning is adapting to reflect a more transparent and technological world, bringing with it a change in attitudes and new challenges for taxpayers. The decisions made now should not be underestimated as they could have unexpected consequences later.

Financial institutions are busy filing their first reports to tax authorities to comply with the common reporting standard (CRS), but loopholes in the global measure mean some taxpayers can remain undetected. Amelia Schwanke highlights the gaps appearing and the jurisdictions enabling them.

Sweden plans to introduce new rules on the taxation of commercial real estate that may complicate tax credits for foreign taxpayers and potentially result in double taxation. Richard Hedin Thyr, tax partner, and Hussein Abdali, tax adviser, at Skeppsbron Skatt, Taxand Sweden, analyse what these proposals could mean.

Germany's Federal Tax Court (BFH) has doubts that the German controlled foreign company (CFC) regime applicable to passive income with an investment character is in line with EU law and, therefore, the BFH referred a case (C-135/17) to the Court of Justice of the European Union (CJEU).

March 2017

A joint international investigation, involving Australia, Germany, the UK and the Netherlands, has led to several arrests and an increase in inquiries against individuals involved in tax evasion that are linked to Swiss bank accounts at Credit Suisse.

The EU Parliament’s Economic and Monetary Affairs Committee (ECON) has accepted proposals to end the use of hybrid mismatch arrangements by multinationals, but has made several amendments to expand the rules.

Dealing with the known unknowns is all any business can seek to do in the uncertain environment, whether it stems from the US or the UK. Cormac Kelleher, international tax partner at Mazars in Dublin discusses the plethora of unknowns and how companies can navigate through it all.

The world is on the cusp of a major tax revolution as cryptocurrencies and online distributed ledger technologies, such as blockchain, push financial systems from the physical world to online. Amelia Schwanke speaks to the experts in a roundtable discussion about the tax implications and usage of digital currencies and blockchain.

There has been a complete paradigm shift in global taxation with the rise in audit risks caused by new global initiatives like the OECD’s BEPS Project. JD Choi, CEO at Tax Technologies, explores the technology solutions that should be administered to mitigate these audit risks in a post-BEPS world.

Recent studies show that the African continent is attracting a growing amount of investments from foreign multinational enterprises. BonelliErede and International Tax Review will provide an overview of the main transfer pricing issues to consider for structuring investments into selected countries.

February 2017

As EU member states determine the criteria for what constitutes a tax haven, while at the same time lowering their tax rates, the debate over tax havens is growing. Keith Brockman considers the parameters of the ideas of ‘transparency’ and ‘tax haven blacklist’.

With corporations meeting the demands of rapidly changing regulations, increased audits, and new tax technology functions, some are overwhelmed with how much tax is influencing their business strategy – leading to a number of outsourcing arrangements. Amelia Schwanke explores whether General Electric (GE) and PwC’s recent agreement has ignited a new trend for outsourcing a business’s tax function

International Tax Review’s flagship tax transactional feature looks at the global M&A market during 2016, explores the tax trends in major deals that may continue into 2017, and provides a breakdown of the leading firms in transactional advice across multiple jurisdictions.

Boaz Aharon Schwartz, the CEO of Deutsche Bank’s local subsidiary in Israel, has been arrested on suspicion of tax and VAT offenses that involves more than ILS 550 million ($147 million) worth of illegal transactions.

EU leaders are queuing up to criticise the US and UK over plans to slash corporation tax, while US President Donald Trump makes provocative comments on the European project. The growing conflict means corporate CEOs are left scratching their heads on tax planning and whether to shift manufacturing, IP and profit into the US.

Companies could continue to face a double tax charge after an Opinion from a European Court of Justice (ECJ) advocate general said that the UK and Gibraltar should be treated as a single entity for tax purposes in the high-profile Gibraltar Betting and Gaming Commission case.

January 2017

Financial institutions may be subject to huge tax bills as a result of a global bank’s upcoming court case concerning dividend stripping and the pending decision of Germany’s states to reclaim revenues lost from similar tax practices.

Tax professionals from all areas of the tax sphere need to move outside their comforts zone to grasp the opportunities available and boost skills. Keith Brockman highlights the need for internal and external networking that could offer previously unknown possibilities.

Tax considerations will never make a deal, but they certainly can break a deal. Laurence Field, a senior tax and corporate business partner at national audit, tax and advisory firm Crowe Clark Whitehill, reflects on the M&A tax landscape that evolved through 2016 and looks ahead to assess what businesses need to know if they are planning to get a transaction over the line in 2017.

Austria, Bulgaria, the Czech Republic, Hungary and Slovakia are seen as the key supporters of the European Commission’s generalised reverse charge mechanism (GRCM), but not all industries or multinationals in these countries will benefit from it.